When it comes to personal finance, one of the biggest conversations has always been about active vs passive income. Knowing about their differences and how to use them in your life will help you succeed with money and create a more stable financial situation. Keep reading to learn more!

What’s the difference between active and passive income? Which one offers more benefits? What are each’s pros and cons?

And most importantly, how can you generate either or both?

I will answer these questions and give you a comprehensive guide on using passive income vs active income so you can start challenging yourself to reach your financial goals!

What is active income?

Active (or earned) income is what we earn from working. It could come from our jobs, businesses, or side hustles. This type of income requires ongoing effort to maintain and grow.

Active income examples

Active income can come in many forms, but all of them require, as the IRS phrases it, material participation in the income-producing activity. This essentially means, you’ve actively participated in generating this income.

Examples of active income sources include:

Job income

Earned through employment, such as a regular paycheck from a full-time job, tips for service jobs, or commissions for sales positions.

Business profits

Earned through business activities, such as selling products or services, the owner actively manages and makes decisions for the business.

Freelance income

Earned by providing freelance client services on a project-by-project basis rather than as an employee.

Consulting income

Earned by providing expert advice and guidance to clients on a specific topic or industry.

There are other sources of earned income, but those are four of the most common.

Advantages of active income 

The primary benefit of active income vs passive income is that it provides a regular stream of income that individuals can rely on.

Whether we work a job, run a business, freelancing, or consult, we can generally count on receiving a consistent paycheck or payment for our work.

Disadvantages of active income

The most significant disadvantage is that it requires time and energy.

You must actively work and put effort into your job or business to earn income. It can be time-consuming and limit your ability to pursue other interests or hobbies. And you only have so many hours in the day to earn money this way.

Additionally, your income may be interrupted if you become sick or cannot work.

How is active income taxed?

When you earn an income this way, it will usually be subject to federal, state, and local income taxes, and also Social Security and Medicare taxes.

The amount you owe the IRS each year will depend on several factors, including your income level, filing status, and any deductions or credits you’re eligible for. 

What is passive income?

Passive income refers to earnings generated without ongoing active involvement or effort. Usually, this income requires an initial investment or some hard work to set up—but once that foundation has been established, it continues to generate income largely on its own.

Passive income examples

Passive income can take many forms, but here are a few of the most common passive income sources:

Capital gains

Profits that result from the sale of an asset, such as stocks, real estate, or other investments. It is the difference between the purchase price and the selling price of the asset.

Stock dividends

Payments made to shareholders by a company from its profits are called stock dividends. They are typically paid out in cash or stock and paid quarterly or annually.

Interest

Earned from lending or having money in an interest-bearing account, such as your savings account or a CD, or from peer-to-peer lending.

Royalties

Payments made to a patent, trademark, or copyright owner for the right to use that intellectual property.

Rental income

Earned from renting out a property, such as a house, apartment, or commercial space.

For more details, explore our list of 30+ specific best passive income ideas.

Advantages of passive income

One of the primary benefits of passive income is the ability to earn money while you sleep. If you also have a full-time job, your passive income sources can make extra money while you work, which can turbo-charge your financial journey.

Passive income may provide a stable source of income without requiring continuous effort or work.

In my opinion, this benefits those who want to supplement their earned income streams or retire early.

Another advantage of passive income is that it can be location-independent in many cases. Once you’ve set up the income sources, they’ll continue running automatically no matter where you are, so you can earn passive income from anywhere in the world.

Disadvantages of passive income

One of the biggest drawbacks is that passive income can be less reliable than earned income.

Some passive income streams can fluctuate or disappear altogether, making it difficult to rely on them as a steady source of income, so you may need to create multiple sources of income.

Additionally, passive income often requires an initial investment of time or money upfront.

For example, starting a rental property business requires a significant cash investment to purchase, make necessary repairs, and market it to potential renters. You may also have to hire landlords or property managers if you don’t want to handle those responsibilities yourself.

Tax implications of passive income

While earning passive income can be a great way to build wealth and achieve financial freedom, it’s important to understand how it’s taxed.

In most cases, passive income is subject to federal income tax and state income tax in the state where the income is earned. 

However, the tax rate for passive income may differ from what you pay on earned income, depending on the type of passive income and how it’s earned.

For instance, capital gains from investments will be taxed differently based on whether they’re short-term or long-term capital gains (basically, whether you held them for less than a year or not).

Qualified dividends are taxed at a lower rate than ordinary income, but non-qualified dividends are taxed at the same rate as normal income.

Most interest income is subject to ordinary income tax rates. However, certain types of interest income, such as municipal bond interest, might be exempt from federal income tax.

If you have specific questions about how the Internal Revenue Service taxes active vs passive income sources, it’s best to consult with a qualified professional.

The differences between active and passive income streams

With a basic understanding of each type of income under your belt, we can now look at the differences between active and passive income. It can help you determine which types of active vs passive income might be best for your lifestyle and goals.

1. Earning potential & scalability of active income vs passive income

The first factor you will want to consider is the difference in earning potential and scalability between active income vs passive income sources.

Active income is limited by hours and education

Your earning potential from earned income is limited by the amount of work you put in.

For example, working full-time has a cap on earning potential based on hours worked and your hourly wage or annual salary.

Creating professional goals and working on educational advancement can increase your earning potential, but these require more time and effort. Additional education or training can lead to higher-paying jobs but require significant investment and may impact your work-life balance.

Passive income has fewer limitations after the income source is set up

This sort of income stream generates revenue without ongoing active participation, which makes it attractive.

For example, rental properties generate income each month when tenants pay rent. Successful blogs and online courses can generate income through advertising, affiliate marketing, and sponsored content.

Scaling is possible by expanding the source of income, creating additional streams, or purchasing a new income-producing asset.

Although a significant upfront investment in time and/or money is required, passive income sources may provide reliable and consistent income for long-term wealth once they’ve been established.

2. Investments of time and money for active vs passive income

Next, something I would consider is how much time and cash you’ll need to initiate and sustain active vs passive income.

Active income only makes money with constant effort and time

Earned income needs consistent time and effort for revenue, meaning stopping work stops income. It requires steady work to ensure regular income, involving a significant investment of time, energy, and ongoing education to maintain earning potential.

Pursuing higher education or training courses can be costly but lead to higher salaries and better job prospects.

In addition, ongoing development and training help you maintain earning potential and stay ahead of industry trends.

This income usually has minimal initial financial investment if you’re getting a traditional job or starting a side hustle. But starting a business or higher education may require steep upfront costs, such as equipment, marketing, tuition fees, or loans.

However, these investments can pay off in the long run by increasing earning potential and career advancement opportunities.

Passive income requires time and effort but not consistently

My thought is you’ll almost always have to make some kind of initial investment to start earning passive income, but some methods require less capital than others.

For example, if I purchase real estate investments, it requires more work upfront than becoming a stock investor.

Further, passive income requires significant time and effort to set up, including research, planning, and creating a product or service.

However, once established, it provides steady income with little ongoing effort.

Passive income can offer greater freedom and flexibility than traditional income streams.

With passive income, individuals can generate revenue even when not actively working. It can allow for a more flexible schedule and the ability to pursue other passions or interests.

3. Risks of passive income vs active income

Finally, research the risks of active vs passive income before going all-in with an opportunity. There is a large difference between active and passive income regarding risk.

Active income has risks like loss of larger income or potential failure

Earning active income may seem less risky, but it still has inherent risks.

For example, the fixed salary or wage in a contract means few opportunities for additional revenue, making it difficult to increase earnings even with more time and effort.

Plus, entrepreneurship or starting a business with no money involves significant risks. It requires a substantial investment of time, effort, and money, and the risk of failure is always present.

In addition, unexpected factors, such as changes in the market, can impact your career success despite careful planning and research.

Active income streams can also lead to burnout and career stagnation. The demands of a job can cause a lack of work-life balance and affect mental and physical health.

Without growth opportunities, employees may feel unfulfilled, decreasing motivation and earning potential.

Passive income has risks that may be beyond your control

Passive income streams require an upfront investment, which can be risky if returns are unstable.

For instance, investing in rental properties or stocks may be profitable, but the market is unpredictable. There’s a risk that the value of something you bought as an income-producing asset (like a rental property or dividend stock fund) will decline instead of increasing.

Further, some passive income sources require a certain degree of maintenance, which may result in revenue loss if not properly handled.

For example, rental properties require tenant management and upkeep, while investment portfolios may require monitoring and adjustment.

Expert tip: Diversify your income sources

Passive vs active income doesn’t need to be an either/or situation: I think there’s room for both in your overall financial plan! And the more income sources we all have, the less vulnerable we’ll be to any risks.

For example, if you lose your full-time job, but you have a side gig and income-producing assets, you’ll be in a better position to afford your bills while you hunt for a new opportunity.

On the other hand, if you only have one source of income, you’ll be completely reliant on that source. If it disappears, you’ll have to scrape by and deplete your savings as you live without a job.

How to use both types of income in your life

Most people’s ultimate purpose for their money is to grow it throughout their lifetime, using it to fund their various financial goals and retirement. 

The good news is that both types of income can work together to help you grow your money and continue generating more! You can:

• Use active income to generate passive income
• Use active income to generate more active income
• Use passive income to generate active income
• Use passive income to generate more passive income

No matter what approach you take, these strategies are great ways to increase your wealth. Let’s look at how they work.

Using active income to generate passive income

While earning an active income is important for paying the bills and supporting your lifestyle, you can also use that money to build long-term wealth and financial freedom by investing your earned income in assets that generate passive income.

Simply funnel a percentage of your active income toward your passive income. This could be anything from saving up a down payment for a rental property to purchasing dividend-paying stocks or investing in index funds and bonds.

Another way to create passive income is by starting a business or side hustle. For instance, starting an online store or blog, or writing an e-book.

Using active income to generate more active income

You can use your existing income to create more active income!

A good way to do this is by investing in yourself and your career. This could mean taking on additional work or side hustles to increase your income or investing in education and professional development programs that can help you earn more money in your current job or industry.

Using passive income to generate active income

Did you know you can also use passive income to create active income streams?

One way to do this is by reinvesting your passive income into opportunities that generate earned income. For example, something like starting a new business or launching a new product or service would make sense.

Using passive income to generate more passive income

With a little bit of smart investing and dedication, you can use your passive income to create a powerful snowball effect of passive income that grows over time and supports your financial goals.

One way to do this is by reinvesting your passive income into more passive-income-generating assets.

Another way to use your existing passive income to support your financial journey is by using it to get out of debt or reduce expenses. By paying off high-interest debt or decreasing your monthly bills, you can free up more money to invest or save for retirement.

Is rental income active or passive? 

Rental income is typically considered passive income. Because once the property is set up and rented out, it will generate income with minimal ongoing effort.

However, if you don’t have a property manager, you’ll have to manage it yourself and be responsible for the tasks that landlords handle, so there is still some active participation involved. These tasks might include maintenance and finding tenants.

Ultimately, if you can afford to outsource the labor, which I recommend, you can make it as active or passive as you decide.

Is it better to have passive income vs active income? 

Ideally, you should have a mix of both, especially during your career years. But it’s particularly important to constantly build up your investment portfolios and other passive income sources.

That way, you can eventually quit your full-time job, retire, and live solely on your portfolio income and other income producing assets. The question of whether to make passive income vs active income isn’t an “either/or” answer but a “both!”

What are the differences between passive income and earned income?

Earned income is money you have to make using your time and effort consistently, and passive income requires less ongoing effort.

Earned income is the same as active income, which is money you receive in exchange for your labor (through a job, side gig, etc.). It’s very common, and many people rely on it.

Passive income comes from sources that don’t require much ongoing effort. Instead of you making the money, your income-producing asset or investment makes the money for you.

Articles related to various income types

After learning about the various ways to earn money, you might want to know more. Check out these articles next!

• 30 Best Passive Income Ideas
• How To Start: Passive Real Estate Investing
• The 3 Main Ways To Create Multiple Sources Of Income
• 17 Best Passive Income Books To Inspire You!

Active vs passive income: leverage both to achieve your financial goals!

The difference between active and passive income is that they present two very different routes for making money.

But both can be incredibly lucrative depending on your preferences, goals, and financial capabilities. For some people, a mix of passive and earned income may be ideal. Others may prefer to put all their effort into generating passive income streams.

Understanding the differences can help individuals make more informed decisions about their income strategies. And creating various income streams can increase financial stability and independence.

The post Active Vs Passive Income And How They Work For You appeared first on Clever Girl Finance.

There are two basic ways to make money. The first is the traditional way: getting out of bed in the morning and going to work at a full-time job. But the second way, using the best passive income ideas, is a lot more fun because it means you get to earn money while you’re sleeping, reading a book, in the middle of a lake on your kayak, or anywhere.

Once you’ve got them set up, the best passive income ideas require little to no active effort from you.

Most of these require a bit of startup capital, so your first step will be building up some savings through a saving game or budgeting. After that, get ready to learn how to make your money work for you!

Knowing how to create passive income opportunities with no money is a bit trickier and narrows your options.

However, there are still a variety of ways to make passive income and increase your cash flow.

Top 30 best passive income ideas

Without further ado, let’s dive into 30 of the best passive income streams! For further learning, be sure to check out our list of great passive income books, and also learn the key differences between active vs passive income.

1. Build a niche affiliate website

A great source of passive income is to build a website. The upfront work of this method includes finding a niche to write about, creating an attractive website, researching keywords that will drive traffic to you, and joining affiliate programs.

Once it’s set up, you’ll earn ongoing income from any affiliate sales your content generates.

You can make occasional updates to keep the site active and also update keywords. For websites like these, think small and specialized.

Review websites for a specific type of product that can be successful and easy to monetize, and research the types of blogs that make money. You can also make a YouTube channel or other social media accounts to create more content related to your website.

2. Create apps or software to sell

If you already have tech skills, think of a program that would improve people’s lives or be fun to use. Even simple apps can be successful.

For instance, look at the story of Flappy Bird: an extremely simple yet addictive game that went viral and at one point was earning its creator $50,000 a day from ad revenue.

The Flappy Bird story is an exception rather than a rule, but it demonstrates that you don’t have to build the fanciest, most complicated apps to earn a profit.

Once your app is available for sale, there’s little ongoing work besides making any necessary updates. There are lots of resources where you can learn how to build an app to make money.

3. Publish eBooks

Self-publishing books on Kindle is one popular way to monetize fiction or nonfiction writing. Actually, writing the book will require the most time and effort, but it’s also one of the best passive income ideas. You’ll also need to market your book in order to let readers know about it.

After that, you get to sit back and make sales! Even if you only charge a couple of dollars, it can add up as people continue buying copies for years into the future.

4. Own rental properties

Rental properties are one of the best passive income ideas, and one of my personal favorites for making money. But if you’re not up for the job of screening tenants and being a landlord, you can turn this into a passive income strategy by hiring property managers. Of course, property managers are an added expense, but it takes a lot of work off your hands.

Owning rental properties is not without risk.

For instance, the property could stay vacant for too long, or repairs might cost you a lot of money. Even so, with caution and due diligence, owning real estate can be very lucrative.

5. Buy bonds and/or Certificates of Deposit

Bonds and CDs (certificates of deposit) are two of the very low-risk best passive income streams. The tradeoff for this safety is usually fairly low returns and having your money committed for a certain amount of time.

There is usually a penalty if you need to withdraw early, so make sure you don’t need the cash soon.

So how do savings bonds work? With bonds, how much they pay mostly depends on how stable the bond issuer is. 

U.S. savings bonds are government-guaranteed and are very safe. Corporate bonds depend on a variety of factors to determine their risk factor and interest rate.

And what is a Certificate of Deposit? It allows you to place a specific sum of cash into an account and earn interest on it in a low-risk way.

It is sort of like a savings account, except you can’t remove your money until the term is done. But at that point, you’ll have extra money in addition to the original amount due to interest.

6. Sell stock photos

One of the easiest and best passive income streams to start is selling stock photos.

Although this isn’t a passive income idea that will usually make you rich, it is relatively easy.

Once you’ve done the work of taking photos and listing them on a stock photography site like Shutterstock, your photos can bring you a little cash on the side for years to come.

These days, most smartphone cameras are capable of producing high-quality images. So you don’t necessarily even need to upgrade your equipment (unless you’re already a hobbyist photographer and have a DSLR on hand!).

Think about the types of photos companies might want to use for websites, articles, etc. The subject matter might not always be the most exciting, but getting paid is exciting!

7. Own a vending machine or ATM

Vending machines and ATMs are some of the more unusual ideas that not as many people realize are possible. You find vending machines and ATMs everywhere but might not stop to consider who owns them! And it’s a great passive income resource.

When you buy or rent an ATM, you can place it in a location you are the owner of or negotiate to share profits with someone who has property in a more lucrative location.

You make a profit from ATM fees charged each time someone uses the machine. You’re responsible for keeping the machine stocked with cash, but you can turn this into a passive income source by outsourcing this work to a trusted third party.

A vending machine business is similar. You’ll want to place it somewhere with a decent amount of foot traffic, and you can outsource the restocking of snacks or drinks inside the machine. Inventory costs can be very low when you’re buying in bulk, so it’s a chance for a decent profit margin.

8. Flip domain names

Domain names are sort of like the real estate of the internet: everyone wants a good one, but there’s a limited supply. Most people want a .com domain that’s memorable and relatively short, so it’s easy for people to type.

If you’re a creative type with a little business acumen, a good passive income hustle could be buying domain names you think could be profitable and in demand and listing them for sale.

You can often do this relatively cheaply, but it’s not without risk since you could find yourself paying for a domain name that just won’t sell.

9. Sublease to roommates

If you currently own a house or apartment (or are in the market for one), doing a rent split with roommates can drastically increase your passive income.

For the cost of sharing a spare room, you’ll add hundreds of dollars to your monthly income. Splitting rent is a form of house hacking, which is essentially canceling out your mortgage payments with rental income.

If you don’t want a full-time roommate and live in a popular area, you can list a room on Airbnb open to shorter-term travelers. You’ll just need to do some cleaning between stays.

Renting your room on Airbnb is one of the most lucrative and best passive income ideas to try!

In fact, you may be able to earn more renting weekly rather than monthly.

10. Rent out your car or parking space

When you’re not using your car, why not let it make money for you? You can offer your vehicle for short-term rentals to travelers on a service like Turo.

Or, you can help someone out with their own side hustle journey by making your car available on HyreCar, where it can be connected with drivers for services like Uber, Lyft, DoorDash, and Instacart. Insurance is built into these services, making it less risky to have a stranger drive off with your car!

And if you live in a high-traffic area, like a city or beach town, you can even rent out your garage for parking. It’s a great idea if you have a space but not a car or are gone most of the day and only need the space in the evenings.

11. Install money-saving apps and get cashback for online shopping

Many of the best coupon websites and a lot of apps are available today where you can earn cashback, find coupons, etc. Most require some ongoing effort, so they’re not passive.

However, Dosh is an example of a totally passive cash-back app. Just link a card in the app, and if you spend money at an eligible store or restaurant, you’ll get your money back automatically.

In the same way, Paribus will work behind the scenes to check your email inbox for online shopping receipts and issue partial refunds if the price drops shortly after your purchase.

And if you tend to do a lot of your shopping online, get some motivation for saving money with a single click, thanks to online cash-back portals. Rakuten, formerly called Ebates, is the big one in this space.

Just install their cash-back button on your browser, and you’ll be notified when you’re on websites where cashback is available. It’s one of the best passive income ideas and requires almost no work.

12. Invest

Investors understand one of the most common ways to make passive income. Over the long term, the stock market has consistently generated steady returns, even if it has ups and downs in the short term. Learning how to start investing in assets that will make you more money is a great way to earn passive income.

Dividend stocks

There are a couple of ways to earn money from stocks. You could buy high dividend stocks for regular cash payouts based on company earnings. Or, hold onto ordinary low-dividend stocks and let them grow in value until you’re ready to sell at a profit.

Dividend-paying stocks can be a smart way to make extra money but keep in mind that dividends aren’t guaranteed. You should use this passive income idea in addition to others for more consistency.

Investing in stocks is one way to avoid having to make an active income by simply growing your money and expanding your portfolio.

REITs

It’s also possible to buy shares of REITs (real estate investment trusts) and earn a share of income from the real estate projects they hold. Learning about real estate investing for beginners is simple and a great way to make money.

Annuities

An annuity can give you the opportunity to make passive income. You can find an annuity to buy from an insurance company. It’s an investment that you pay into now in exchange for funds later.

Other investing opportunities

There are also mutual funds, exchange-traded funds (ETFs), and index fund investing that you can continually invest in, in order to get a large profit later. You can begin with any of these using Robo-advisors or an investment advisor.

13. Crowdfund real estate

As mentioned above, REITs are a simple way to start passive real estate investing and earn a share of income from real estate, but with those, you don’t get to choose specific properties to invest in. If that sounds interesting to you, the next level up is contributing to crowdfunded real estate.

Through programs like Fundrise and RealtyMogul, you can buy a stake in specific real estate projects from the comfort of your couch and earn a share of the income from them.

However, most platforms require a minimum investment of at least $1,000 and sometimes more.

14. Earn credit card rewards

Who doesn’t want to earn money just from doing their normal spending? A lot of credit cards offer sign-up bonuses and a certain percentage of cash back for various purchase categories.

It’s one of the best passive income streams to earn extra money or save up credit card points to use toward travel.

The one caution I have with this passive income method is that you have to be careful and disciplined with your spending.

I recommend treating it like a debit card, and don’t spend more than you have in your bank account. That way, you’ll be able to pay your balance in full each month instead of having to learn how to manage credit card debt.

15. Rent out your tools

Sure, renting out your tools may be one of the more unique passive income ideas, but it can be a great way to earn cash. When it comes to renting, you can look beyond your home and your garage and into your shed!

Offering community rentals of some bigger-ticket items, such as lawnmowers, power tools, etc., can be a great idea on multiple levels.

It allows everyone in your neighborhood to get things done efficiently without each shelling out thousands of dollars for individual sets of equipment that only get used once in a while.

You can try to organize something like this locally (as long as you trust your neighbors!) or try out a peer-to-peer rental app.

Beyond tools, you could list things like camping equipment, kayaks, furniture in college towns, etc. Just make sure to consider any legal implications if you rent something that could lead to injury.

Be sure to get your copy of the book, The Side Hustle Guide!

16. Housesit

Housesitting is another semi-passive income idea since housesitting isn’t all just literally sitting around. Depending on the arrangement, you might be living at the property while the owner is away, or it might just require you to stop by to get mail, water plants, feed a cat, etc.

The beauty of this is that if you have work you could get done online or one of the high paying remote jobs, you can do it at the same time while you house-sit—essentially making two income sources at once! You can also housesit as a way to travel for free.

Making a profile and getting verified on a website like TrustedHousesitters can help you start finding gigs around the world, especially if you have some references.

17. Lend money to peers

Just like you can get a lease or buy a car or get a mortgage and pay interest on it, you can be the lender who charges interest. If you have some liquid funds that you’re able to part with for a while, this is another way your money can make money.

There are a variety of P2P (peer-to-peer lending) websites where this can be done with contracts and personal verification methods to help make sure that borrowers and lenders are legitimate.

However, there’s still a risk that a borrower can default on a loan, so don’t put all your eggs in one basket here.

It’s also not usually a good idea to do this with people you know, as loaning money to family and friends can be complicated unless you’re prepared to consider it a gift. Plenty of relationships are ruined over borrowed money.

18. Keep your savings in a high-interest account

Different types of bank accounts, like high-yield savings accounts, are very secure places to keep your money.

However, the drawback is that you usually won’t earn significant amounts of passive interest income.

Sometimes you can get up to 5% on limited amounts at credit unions or other special accounts like Netspend.

Otherwise, you can usually expect to see 1-2% on regular online savings accounts. These rates are partially determined by the Federal Reserve’s target interest rate, so they can go up and down.

19. Buy a blog

Instead of starting a blog from scratch, you may be able to buy one that’s already earning income. Then, you can turn it into passive income by outsourcing the labor to writers and digital assistants.

Some active management and communication might be necessary, especially as you try to scale.

However, if you focus on putting out evergreen content with monetized affiliate marketing, this can turn into a very lucrative passive income idea.

You can also make money from ads, selling products, and even offering courses on your blog.

It can take a couple of years of hustling to start bringing in a significant amount of passive income each month. If the best passive income ideas were easy, everyone would do them!

But with enough determination and creativity, you can set your future self up for a life of kicking back while the money rolls in. Especially if you learn how to make money with a blog for beginners!

20. Sell a course

Did you know you can create your very own online course to sell? Whether you are a fantastic cake decorator, know exactly how to teach about decluttering your life, or know how to play an instrument, you can create and sell a course for it!

Selling courses is one of the best passive income ideas. Once you create your course, your earning potential is unlimited.

Course platforms to use

There are many platforms you can use to get started, but Udemy and Teachable are among the most popular.

You will have to invest some money for monthly fees depending on the type of plan you go with.

However, teachable has a free starter plan that you can try out and see how you like it first!

21. Start a vlog

Vlogging is another excellent way to make passive income.

However, this requires a bit more footwork than the others, but it also has the potential for a decent payout.

The average YouTuber makes over $60,000 a year! There are plenty of ways to monetize and make passive income from a vlog.

For instance, with advertising, affiliate links, sponsorships, and more.

You will continuously create content but can keep earning from videos that you have already made. And since the number of hours watched every day on YouTube is 1 billion, there’s a good chance you can earn from your vlog.

22. Sell printables

Who doesn’t love printables? Printables are those adorable print-outs you can download and use for just about anything.

You can create anything from health trackers to planners to sell. Design your digital products on sites such as Canva or PicMonkey.

Once you design your printables, you can either sell digital products on a platform like Etsy or on your very own website.

Printables are one of the easiest and best passive income streams that continuously earn you cash!

23. Rent out your designer items

Are you a fashionista with a designer collection of handbags and clothing? Then make some money by renting out those beautiful items! Rather than selling them once, you can rent them out and keep making money on them.

Plus, if you are still in love with that Chanel bag hanging in your closet and not ready to part ways with it, this is an excellent way to keep it while earning money with it.

Get started making extra money with sites such as Rent My Wardrobe! It’s one of the best passive income ideas that can help fund your savings account and fashion habit.

24. Sell custom products with print on demand

Thanks to print-on-demand platforms, you can set up your own store and not even have to carry inventory. Whether you want to sell coffee mugs, shirts, or notebooks, sites like Printify and Printful will help.

You create your design and upload it to any product you want to sell in your shop, and voila, you start earning money.

There are options to sync your print-on-demand products to sites such as Etsy, or also Shopify, Printify, or your own website store. You can earn hundreds or perhaps even thousands of dollars a month, so it’s one of the best passive income ideas to start.

25. Rent out storage space

Do you need extra cash and have some unused space in a basement or garage? You can rent this extra space out for other people to store their stuff.

Your unused space can even help pay your mortgage or at least some of it! Check out Neighbor.com to connect with people who need storage space.

26. License some music

Are you musically talented? If you spend hours creating new music, it doesn’t have to be just a hobby, it can actually make you money.

Licensing your music is one of the hobbies that make money. You allow other people to use your work in exchange for royalties or commission.

Epidemic Sound is an example of a widely popular platform that can help you license your music to others.

27. Advertise using your vehicle

You may be able to make money just by driving around town or to and from work. There are companies that allow you to place an advertisement on your car to make money.

Getting your car wrapped is a good way to make passive income because once it’s done, it doesn’t require much thought or upkeep.

However, it’s important to work with a reputable company because there are a lot of scams associated with car advertising.

28. Sleep studies or surveys

A sleep study gives a whole new meaning to making money in your sleep. You can sometimes get paid to take part in a medical sleep study.

During a study, a technician monitors the activity in your brain.

Each study may have requirements for those that participate. But it can be one of the best hacks to make money without much effort.

29. Open a laundromat

A laundromat is another passive income type of business. It does require money to get started, as you’ll likely need to purchase supplies and equipment, not to mention rent or buy a space.

Be sure to do your research on how best to buy a Laundromat whether it’s own your own or through broker. It’s also very important to throughly assess your Laundromat operating costs and profit margins.

However, laundromats operate on a mostly passive basis, without you needing to do too much as long as you outsource the work. So this is a great way to make an income long-term. It’s not uncommon for people to purchase an existing laundromat and take over it’s ownership.

​30. Try dropshipping

Dropshipping is a way to have an online store without having to keep any inventory. People order from your store, but then a third party sends them the product. It can be more passive if you hire someone for the day-to-day operations.

Starting a dropshipping business involves doing research, finding a supplier, creating a store, and more. But it can be worth the time and effort! You can make almost $40,000 a year on average, not bad for a passive income idea!

Expert tip: Give yourself time to build passive income

When choosing a passive income source, it’s important to understand that setting up this new income idea will take a bit of time. Depending on which of the many options you select, you could spend anywhere from a few hours to a few months getting things ready.

Before you get started, we recommend being sure you have the time or can make the time to devote to the passive income idea in the beginning, and then later you will have the benefit of spending less time on it while still making money!

Taxes and passive income

There are some things to keep in mind about taxes and passive income. You will still owe taxes on your passive income, the same as active income.

Although you may be able to find some ways to make passive income with lower taxes, such as tax-free municipal bonds or long-term capital gains, it’s important to still talk with your accountant for tax advice before creating a passive income source.

How can I make $1,000 a month in passive income?

Making $1,000 a month in passive income can be done by selling something such as a course, printables, or stock photos.

There are, of course, many other ideas how to make an extra $1,000 a month in passive income, though selling something is one of the easiest and potentially fastest ways.

Keep in mind that $1,000 a month is $250 a week so it’s a good idea to breakdown how much on average you’d need to sell a week to meet your monthly goal.

How to passively make $2,000 a month?

For you to passively make $2,000 a month or $500 a week, you can combine a couple of different passive income ideas.

For example, selling a created product (e.g. an ebook or online course) or an affiliate product and stock market investing. Or real estate rentals and stock market investing. Choose two high-earning ideas and do both to have the best chance of making a couple of thousand dollars consistently.

How to make $5,000 a month passively?

If you use a few different ideas, you improve your chances of making more money, and be sure to choose ideas that are likely to make a higher income over time.

To make $5,000 a month passively, you will likely need to combine two or even three passive income sources. Some ideas include starting a blog, affiliate marketing, investing in real estate, investing in the stock market etc.

You can also check out our article on high income skills you can develop that can help increase your passive income earnings.

Articles related to making passive income

If you enjoyed this read about passive income, you’ll love these articles!

• How To Start: Passive Real Estate Investing
• 17 Best Passive Income Books To Inspire You!
• Active Vs Passive Income And How They Work For You
• 19 Passive Income Ideas For Students

Make more money with this list of best passive income ideas!

There are so many ways to make passive income that are easy and lucrative. You can start with one and continue to add more so you can earn even more money.

Remember, some of these ideas require more work than others, so decide what is best for you and your schedule by creating a time management plan and go from there. Also, use better budgeting techniques to manage the money you earn!

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The post 19 Passive Income Ideas For Students appeared first on Clever Girl Finance.

The post 17 Best Passive Income Books To Inspire You! appeared first on Clever Girl Finance.